Substack fires 14% of its staff

Substack, a newsletter startup that attracted prominent writers including George Sanders and Salman Rushdie, fired 13 of its 90 employees on Wednesday, part of an effort to save cash for startups amid cuts in funding for the industry.

Substack CEO Chris Best told staff that the cuts affected staff members who are responsible for human resources and writer support functions, including a person familiar with the discussion, according to a source familiar with the matter.

The reduction is a blow to a company that has said it is opening up a new era of media where people who write stories and take videos will have more authority, receiving direct payments from readers for what they produce, instead of being paid for by publications. Or sites where their work can be seen.

Mr Best told Substack Wednesday staff that the company had decided to cut jobs to be able to finance its operations without attracting additional funding from its own revenue in a difficult market, according to a person familiar with the discussion. He said he wanted the company to seek funding from a strong position if it decided to increase it again.

With respect to employees, Mr. Best said the company’s revenues are growing. He noted that Substack still had money in the bank and continued to hire, albeit in a slower location, the person said. Mr. Best said the cuts will allow the company to focus on product and engineering.

The decline comes months after Substack scrapped a plan to raise additional funding after the enterprise investment market cooled. The company had discussions about raising $ 75 million to $ 100 million to boost its growth, and in some fundraising discussions, the company was valued at $ 750 million to $ 1 billion.

According to The New York Times, Substack, which reduces its writers’ subscription fees, generated about $ 9 million in revenue last year. This means that funding discussions have valued the company with a solid premium compared to its financial results. Substack was said to be valued at $ 650 million last year after the company closed a $ 65 million financing round.

Many media companies are expecting the opposite winds in the coming months as the wider economy shows signs of tension. Advertising revenue may decrease as companies reduce marketing budgets to save money, and a decrease in subscribers may increase if consumers have less dollars to spend on news and entertainment.

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